HOSP 3100 - Case Study #1 - Fall 2020 (From course text "Revenue Management for the Hospitality Industry", Hayes and Miller, 2011, page 127) KEY CONCEPT CASE STUDY "If anyone should be able to afford our regular rates, it's seniors," said Adrian, the rooms manager at the 480-room Barsang Resort. "You're our revenue manager, don't you follow economic trends? People today have more money when they get older, not less. And with the Baby Boomers starting to turn 60, they're going to have even more to spend than previous generations. All I'm saying is that I think a senior discount for this package just leaves money on the table." Adrian was having coffee in the resort's restaurant with Damarie, the resort's revenue manager. They were discussing an idea Ramacie had presented at the last Strategic Pricing and Revenue Management Advisory Committee meeting. Essentially, Ramarie had worked with the hotel's sales and marketing department to devise a "through-the-week" package targeting active senior travelers. Adrian wasn't convinced it was a good idea. "I'm at the desk when they check in," continued Adrian. "Those folks do have money." "You're right," said Ramaria "Senior travelers are typically among the wealthiest of all the markets that we target." "Then why offer them special discounts?" asked Adrian. "Because we have empty rooms," replied Ramatio"Seniors have money, but they have something even more important to us. They have time." "Time?" said Adrian "Time. They have worked all their lives and have had longer to save, so they have more disposable income. That's still true, even after the most recent economic downturn. And lots of them love to travel. Of course, seniors also love discounts. Every group does, and that includes those with plenty of money. But seniors are also in a position to book with us at the last minute. They can vary their travel plans. They have no kids to worry about taking out of school. No limit on when they can get off work, because they already are off work. Permanently. And weekend travel is nice, but weekday travel is just as nice for most of them. They have the freedom to choose." "Let me ask you, when is our hotel least used?" said Ramaties Weekdays," replied Adrian. "We're booked solid most weekends. You know that." O.K. When do we need flexible date travelers?" asked Ramarie. "Through the week," said Adrian slowly. "Now I get it." -Specific product offerings-one package and one rate-only. What channel(s) do you recommend? -Is it a problem that some people may be paying different rates than others? Why/why not? -What price-differentiation tactics might you suggest that Damario use? Why? -Do you think a discounted rate could be perceived negatively by potential guests? Why/why not